Indian diamond polishers say no to imports for a monthNovember 25th, 2008 - 5:50 pm ICT by IANS
New Delhi, Nov 25 (IANS) The Indian diamond processing industry has imposed a voluntary ban on import of roughs for a month beginning Tuesday to tide over the current crisis that had led to lower demand and pile up of inventories.”Prices of rough diamonds have been highly volatile and has been fluctuating by as much as 40 percent,” said Sabyasachi Ray, the executive director of the commerce-ministry-promoted Gems and Jewellery Export Promotion Council.
“It is very difficult to establish a stable price in this scenario and we have appealed to manufacturers to cease imports for one month,” Ray told IANS over phone from Mumbai.
As per data available with the council, 10 out of 11 rough diamonds are cut and polished in India. The industry logged exports worth $6.36 billion during April-October this fiscal - 10.95 percent higher than $5.74 billion in the like period of last year.
Ray said Indian diamond manufacturers usually keep a stock of rough and uncut diamonds and that a one-month no to imports will not have a major impact on manufacturing.
“We have almost two and a half months of stock and do not want to put greater strain on our working capital by paying for imports at prices which might be too high.”
Diamond exporters are also facing a severe cash crunch as buyers from the US and Europe are delaying payments because of a sagging demand and an overall economic downturn.
In Gujarat, which accounts for the bulk of India’s diamond processing industry, many units gave their workers 40 days’ leave for this year’s Diwali season instead of the usual 20-day festival vacation.
“Our working capital is being squeezed as diamond exporters have not received payments from buyers for three months and it might take another two months or so for payments to be realised,” said Ray.
Banks are also asking diamond exporters to repay that are called packing credit loan that are taken to import rough diamonds, and process them for re-export or for use by the domestic jewellery industry, he said.
Officials at the agency pointed out that as was the case with other industries, Indian diamond processors were also looking at markets beyond the US and Europe to hedge their risks.
“We have been actively looking at the domestic and the Middle-Eastern markets to reduce our exposure to US and Europe for a year now and will continue to do so.”
Cut and polished diamond industry was the top performer within the country’s Gem and Jewellery Export sector in 20007-08, accounting for 68 percent of the export basket at Rs.570.61 billion.